What’s the most important piece of paperwork in your freelance arsenal?
The contract, right?
It’s that little piece of paper that outlines the scope of work, ensures your client is legally obligated to pay you, and is the official start to all new working relationships.
But here’s the thing.
If the contract is the start, then what’s the end of your agreement? What is it that ties off the agreement and lets all parties involved know that the job is, officially, complete?
The answer is your invoice.
Your freelance writing contract and invoice are the book-stops to the job you’ve agreed to take on. They’re the hard start and stop for each job. And sure, contracts might get more love in the freelance advice world, but these two should always go hand-in-hand.
The invoice you send to the client doesn’t just officially close the agreement (pending payment of it of course), but it reminds the client of the payment terms and work completed.
In my humble opinion, the invoice is almost as important as your freelance contract, but its one of those elements that gets very little coverage online.
And we’re going to change that.
I’m going to run through the key considerations for crafting a killer invoice, as well as list some awesome tools to help you look even more professional.
Why You NEED a Professional Looking Invoice
I’m not going to BS you here and say an invoice is an ironclad solution to the problem of non-payment.
If a client never had any intention of paying you, there’s very little you can do except take them to court. And then you have to weigh up whether the legal fees will eclipse the payment itself (more on mitigating this risk later).
However, a solid contract and invoice combo will go a long way to ensuring you avoid clients who never had any intention of paying you. It gives you the paperwork to properly battle any non-payment and secure the money that’s rightfully yours.
And thats incredibly important because there’s a huge issue in the freelance world with non-payment. It doesn’t take long to find various studies explaining how difficult some freelancers find it to secure the payment that’s rightfully there.
- This Paypal study explains 58% of surveyed freelancers had trouble securing payment (source)
- FreelancersUnion puts the number at 71%, and puts the average monetary loss at $5,968 (source)
- Experience reports 1 in 10 freelancers have struggled with rent/mortgage payments due to delayed payment from clients (source)
It’s a big issue, right? I mean, over 50% of us are struggling to get the payments we’ve rightly earned form people who promised to pay up.
But that’s not the only use for a well devised invoice. No, the other use is, arguably, even more important. If you’ve ever been subject to an impromptu tax audit, you’ll know how necessary it is to have kept proper documentation of all the payments coming your way.
This is all a very long winded way of saying that an invoice is not something that’s nice to have. It’s a necessity for your business. But what’s included in a professional invoice?
The Anatomy of a Freelance Invoice
Rather than a long list of elements you should be including in your invoice, I’ve gone into my accounting software and created a test invoice so you can see what it actually looks like.
However, don’t think this is the only format you can use. You should be using all of these different elements, however, you can do so in whatever order or design best suits you and your brand.
Here’s what a basic invoice template of mine looks like; I’ve followed it with an explanation of what everything is and why you need it.
1 – Your Business Name
The client has to know who’s sending this invoice so they know who they’re paying. If you’re established as an LTD/LLC, then use your business name. If you’re working as a sole trader, then use your own name or the name you trade under.
2 – Your Logo
Technically this is an optional inclusion. I always think it’s nice to include as, even a simple logo like the one above, adds more of a professional veneer to everything.
3 – Your Contact Details
Immediately after your business name be sure to include your business’s contact details. You can include as little or as much of the below as you want, just be sure there’s at least 1 method through which the client can contact you.
I include all of the below just to ensure everything moves forward smoothly.
- Physical address
- Phone number
- Email address
4 – Client’s Contact Details and Address
Again this is super important. This is an official request of money, you need to make sure the client’s business name address, and contact details are included. Otherwise it could be for anyone.
5 – Invoice Number
This is important because, if you ever do get hit with an audit you’re going to need things in order. Numbering your invoices allows you to keep better track of everything. However, this goes hand in hand with another tracking method. You’re going to need to keep the invoice numbers in either a piece of software or a simple excel spreadsheet with other details like date and amount.
It sounds like a boring process, but this will save you so much time when it comes to doing taxes later on.
6 – Date and Payment Terms
As mentioned above, your invoice is an official request of payment. You have to not only list the date the invoice is sent, but also the terms for payment.
The most frequent terms are:
- Net 15 (to be paid within 15 days of receipt)
- Net 30 (to be paid within 30 days of receipt)
- Net 60 (to be paid within 60 days of receipt)
You can see above that I favor Net 15, however, you can also request payment upon receipt which I do for deposits for jobs.
You’ll notice above that I include the due date for payment as well, just so there’s no confusion. Just be sure that the payment terms were outlined in your contract as well.
7 – Payment Method
This is optional and, honestly, I rarely use it. I have some clients who prefer bank transfers, others prefer Paypal. If they have no preference, I’ll list a specific method, usually bank transfer unless they’re international as it saves me paying PayPal fees.
8 – Deliverables
The deliverables area is one of the most important on the invoice. It’s here you list what you did, and the price it’s going to cost the client. Now, depending on the client and any pre-agreed format, there’s a couple of things that I’d always recommend doing.
8.1 – Don’t bundle everything together. If you’ve done 4 blog posts at $300 each, don’t say “blog writing – $1200”. I wouldn’t even use the quantity box for this to say “blog writing $300 x 4 = $1200”. No, write the title of the articles as individual deliverables so the client can quickly cross them off as done and paid for.
8.2 – Do use the quantity for things on an hourly rate, but be prepared to provide proof. For example, the handful of times I’ve worked hourly rates I’ve listed my research by the hour. So It would read something like the below:
“Researching target audience for landing page creation at $100 per hour. Qty = 8 // Rate = $100 // Amount = $800.
8.3 – Don’t itemiz, etc.,e too much. I focus on the deliverable, but that’s because I charge by the deliverable. Don’t think you have to break everything down into the bare bones steps. If the client is paying you for a case study on a flat fee, don’t give them an hourly rate for research, drafting, editing , etc., Just put the deliverable in and the fee.
9 – Total Due
So this is what you’re really after. This is where you list exactly how much your clients are going to have to pay you for the job. All it is is a sum of the total deliverables’ amount. However, if you’re charging tax on top, be certain to include that addition prior to listing the total.
10 – Payment Details
So how’s the client going to pay you? You’ve got to include your business bank details on the invoice so they now where to send the money. You’ll note in the above that I have listed my full bank details (including my name) but have also added a sentence which explains which Paypal account t use should they prefer PayPal.
11 – A Final Reminder
I include a final reminder of my payment terms and the late payment penalty at the end of the invoice. This is just to cover my own back in case they say the late payment fee wasn’t clear. I can then point to it in both the contract and invoices.
Getting Started with a Professional Looking Invoice
When I first starting freelancing I couldn’t afford some fancy software or an accountant to handle these things for me, so I needed a pretty cheap solution.
And there’s nothing cheaper than doing this yourself.
I actually built my own invoice template in Google Drive. I’d fill this in every single time I closed a job and sent it to clients and a PDF (so the details couldn’t be amended). Here’s a look at that template, and here’s a link to download a copy of it yourself if you’re just starting out and want a free solution.
I’d fill this out every single time and log the details of each invoice in an Excel spreadsheet so I could keep track of everything. Here’s a look at that sheet:
This was a good solution for the time, and I’d recommend every newbie freelancer to do something similar simply because it’s free. All it costs is time. And once again, if you want a free copy of these templates, simply click here.
However, after a while it’s going to become too costly for you to keep this up to date. It’s simply not an efficient method of storing your invoice details once business picks up because it takes too much time.
I’d recommend that once you’ve hit a certain income level, I’d recommend $1000 per month, you invest in some accounting software.
Where to Progress From Manual Sheets?
Once you progress to $1000 per month (or if you’re already there), you should look at investing in some accounting software. What this will do is make it far faster for you to invoice clients and track payments. Much of it can be automate (to an extent) with things like direct debit set ups for repeat clients, and even the simple things like populating client details with the click of a button save time.
I haven’t tried every accounting service under the sun, but I have tried a few and here’s what I’d suggest.
I’d recommend you use either QuickBooks Online or Dubsado.
Quickbooks Online Breakdown
If you’re looking for a tool purely for accounting, Quickbooks will be the best bet. The invoice I used above with the numbers is from Quickbooks.
However, where Quickbooks really shines is its ability to sync with your bank accounts so you can more accurately track your income and spend. You can accept payments directly through your invoices for a small charge (2.9% = 0.25c)
Quickbooks will also quickly log all of your profit and charges so, at the end of the year when tax season rolls around, you can get detailed reports on profit/loss, expenses etc at the click of a button. That alone is worth the money in my mind as it makes taxes incredibly easy to do.
Also, when you progress to the point of needing an accountant, the majority of them will be able to log straight into your QB account (QB actually has a list of qualified accountants who use the tool to make finding an accountant easy).
Getting an accountant once you hit a livable wage with your writing (or before) is a necessity as these guys will be able to point out where you’re wasting money and how to reduce your tax to more manageable levels.
Right now, the price of QB starts at $20 per month. There’s always a free or half price offer somewhere though, so see if there’s any affiliate links to get you a discount.
I’m relatively new to using Dubsado. I came across it after one of the writers I hire sent me both the agreement and invoice through from this service.
And whilst we’ve not been together long, I absolutely adore Dubsado.
Dubsado is both more and less than Quickbooks Online. It struggles to keep up as an accounting tool as it doesn’t have the accounting functionality of QB. But then again, it’s not a specialized accounting tool.
What Dubsado is a customer relationship tool for creatives. In this tool you’ll be able to put together proposals, attach contracts, and send invoices.
It’s pretty much a one stop shop for everything you need to get your next client relationship off to a flying start. It does have bookkeeping options, but as my accountant works in QBO, I’ve not used it.
I can say that the proposal, invoice, and contract options are awesome. There’s even the option of one click payment for your clients. You can add a button to invoices so the client can pay with card through the invoice directly.
Dubsado is a great tool but if you start earning a full time wage I’d recommend using it in tandem with Quickbooks (they do offer a full integration) and getting an accountant just to help you not fall foul of the tax man.
If you fancy trying Dubsado out, feel free to use my affiliate link to get 20% off your first month.
Invoices are an Integral Part of Your Client Strategy
And you can’t overlook them.
Whether you’re at the beginning of your freelance career or somewhere later on and already earning good money, you’ve got to have a firm focus on your finances and how you’re requesting them.
Don’t let an otherwise perfect collaboration end on a weak note by sending through an unprofessional, amateurish invoice.
It might look like a single piece of paper, but your invoice is the official close of your professioanl relationship.
Make sure you end on a strong footing with clients.
Pete Boyle is founder of have-a-word.com, where writers go to learn how to grow their freelance business. For a step-by-step guide to growing your freelance writing business, check out Pete’s Freelance Business Blueprint course.